Watsco, Inc. announced a definitive agreement to acquire Jackson Supply Company for $230 million, adding 25 distribution locations and roughly 5,000 customers to its network. The deal is expected to close in the second quarter of 2026 and will be structured so that Jackson Supply continues to operate as an independent business under its existing management team, including Chairman Jim Durrett and Jennifer Ballsieper.
The acquisition broadens Watsco’s footprint in high‑growth Sunbelt markets—Texas, Louisiana, Tennessee, Alabama, Mississippi, Oklahoma and Arizona—enhancing the company’s scale and diversification in a highly fragmented North American HVAC distribution market. By adding Jackson Supply’s customer base and locations, Watsco strengthens its competitive position and gains access to new sales channels in key growth regions.
Watsco reported Q1 2026 revenue of $1.53 billion, beating the consensus estimate of $1.50 billion by $30 million. Diluted earnings per share were $1.87, a $0.14 beat over the $1.73 estimate. Revenue was flat compared with Q1 2025, while EPS fell 3% to $1.87 from $1.93. Operating income declined 2% to $110 million from $112 million, and gross profit margin contracted to 27.9% from 28.1% year‑over‑year. The earnings beat is largely attributable to higher average selling prices that offset lower unit volumes, a pattern driven by the ongoing A2L refrigerant transition and the company’s pricing power in core HVAC equipment sales.
Segment performance shows HVAC equipment sales accounted for 65% of total sales, while other HVAC products represented 30%. E‑commerce sales, which now comprise 36% of total revenue, grew 16% year‑over‑year, and OnCallAir® GMV increased 20%, underscoring Watsco’s technology‑driven growth initiatives. The company’s debt‑free balance sheet and $593 million in cash and short‑term investments provide a strong financial foundation to support the acquisition and future investments.
"Jackson Supply is one of the most iconic, entrepreneurial businesses in our industry. Jim Durret and his next generation team of leaders will continue to guide the Company in their next chapter of growth, while sustaining their name, identity and unique culture. We look forward to supporting their growth with our capital, technology, industry relationships, and more to build on their impressive track record of success," said Albert H. Nahmad, Watsco Chairman and CEO. "Our markets are experiencing improved stability as we approach the Summer selling season for our products. First quarter results point to improving stability now that the transition to A2L products has matured. We expect a more simplified business environment this year, but it is still early in our selling season, but so far, so good." Aaron J. Nahmad, Co‑Vice Chairman & President, added, "We're looking forward to a more normalized 2026." Executive Vice President Paul Johnston noted, "We've had a number of price increases to date from several of the manufacturers and we are going to have a price increase pretty much across the board."
Watsco’s cash‑rich, debt‑free balance sheet and robust cash reserves position the company to absorb the costs of the Jackson Supply acquisition while continuing to invest in technology and e‑commerce platforms. The A2L refrigerant transition remains a headwind, but the company’s pricing strategy and higher average selling prices have helped mitigate its impact on margins. Overall, the acquisition and Q1 earnings beat reinforce Watsco’s strategy of scaling through buy‑and‑build acquisitions and leveraging technology to drive growth in a fragmented market.
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